Two Fish Management is calling for changes in Barrick Gold Corporation (NYSE:ABX) (TSE:ABX) through the breakup of the company by geographical region.
Mike Morris, co-founder of Two Fish Management has exposure to Barrick Gold Corporation (NYSE:ABX) (TSE:ABX) through its options holdings. In his letter to Barrick, CEO Jamie Sokalsky recommended Barrick Gold’s North and South American assets be split from the African and Australian Pacific holdings.
Focus On Unique Needs
Mike Morris feels the split would facilitate the mining company on the unique needs of each geographical region. He indicated that his proposal would help the company’s stock price double from the current level.
Barrick Gold’s Price Fell Nearly 50 Percent
The mining company’s share price fell nearly 50 percent during the past year, as Barrick Gold took massive write-downs and cut its dividends.
The gold mining company’s shares traded above $43 in September 2012. However, it fell to its 52-week low of $13.43 in July. Mike Morris feels that if Barrick Gold Corporation (NYSE:ABX) (TSE:ABX) has just held its productive new world mines, the company could potentially trade between $40 and $50.
78-Page Presentation
In its 78-page presentation, Two Fish Management highlighted a series of recommendations, including selling non-core assets such as Donlin Gold and Kabanga Nickel, refocusing the Barrick portfolio on North and South America, revising executive compensation to reflect return on invested capital, as well as shareholder returns and spinning-off or selling African Barrick, Australia Pacific and Global Copper business segments.
In his letter to Barrick Gold Corporation (NYSE:ABX) (TSE:ABX), Mike Morris also highlighted that being the world’s largest gold mining concern, the company should induct into its board a geologist or an engineer.
Small Call Options
Two Fish Management, founded by Mike Morris, is relatively small and has exposure to Barrick Gold primarily through call options. However, Morris indicated he hope to bring in some of the top Canadian institutional shareholders, including several of Canada’s big banks, which holds a significant stake in the gold mining company to support his recommendations.
However, the gold mining company responded by saying it is continually evaluating opportunities to translate Barrick Gold’s strengths into higher stakeholder returns.
